How many of you got caught up in the hype near HIGH? Was this swift decline a surprise to you? Market appears to be in pullback mode due to profit booking event. What should we expect in coming weeks ahead!

Lets take a look at below chart:

Nifty still above MA(100) while MA(100) above MA(200) - Nifty might bounce from MA(100) like it did in October, however the scenario is different this time.

McClellan Index is below EMA(59) while EMA(59) below MA(100) - McClellan index is trending down while EMA and MA are flat suggesting further caution.

Nifty has pulled back near MA(50) and trying to find support for a bounce. It will not be a surprise if it breaks through MA(50) like last time and then reverses to climb above it.

We have included few more indicators in our weekly Nifty chart below. Divergences between Nifty and rest of the indicators are widely visible, consider them as warning signals. Remember, divergence can remain for weeks/months and even years before the actual market breakdown. Hence they should be taken as guidance and NOT perfect signal. As of now Nifty is moving in a channel(range) shown by dotted lines.

Based on the chart, we need to be cautious as market internals are NOT strong to sustain a major rally. Low risk entry will be near lower end of the channel shown in weekly chart. However break of the lower end of the channel will change the market character and market shall drift down further. Be cautious and always have STOP LIMIT for any open positions.